morning, six months after its initial launch, Kansas-based theater giant AMC
Entertainment (AMC 12.06, -0.19, -1.6%) announced that its loyalty
rewards program – AMC Stubs A-List – has surpassed 600,000 members.
Initial expectations were for 500,000 members at the end of year one and a mln at the end of year two. On the company’s Q2 earnings conference call on August 1 management outlined a faster pace of enrollment in the program, which at the time saw 150,000 enrollments in the prior month (July).
The program allows members to see up to three movies per week, in every available AMC showtime and format. AMC Stubs A-List can be used immediately upon purchase or in advance. Other perks include discounts and benefits of AMC Stubs Premiere, free upgrades and refills on popcorn and soda, express service at the box office and concession stand, as well as points earned for money spent.
What does this high enrollment mean going forward? For starters it validates AMC’s decision to offer the discount to members And supports it as a technique to attract customers. Last quarter AMC reported nearly unchanged admissions revenues of $751.4 mln compared to $753.5 mln in the prior year, mostly driven by an 8.6% surge in attendance at its U.S. theatres compared to a year earlier, but partly offset by a decline in U.S. average ticket price of 6.6% and industry-wide softness in Europe. As an aside, last quarter food and beverage revenues were up 6.5% to $384.8 mln, primarily driven by the increased U.S. attendance.
Even though AMC Stubs A-List is priced at a premium to the struggling Helios & Matheson’s (HMNY 0.01, -0.00, -7.8%) MoviePass subscription service (starting at $9.95/month), Sinemia’s two ticket per month service (starting at $9.99/month), and Cinemark’s (CNK 35.35, -0.27, -0.8%) Movie Club which offers one ticket per month at a discount among select other perks ($8.99/month), management seems to be handling costs well.
Given the strong enrollment numbers in 2018, management offered that it doesn’t think the A-List is going to be a small program. The company opined that someday A-List may get up to 10% of ticket sold. The company believes this program, net of all cannibalization and dilution, net of all the money it pays its studio partners, will generate about $15-25 mln of incremental EBITDA for AMC, based on 2.5 visits per month.
Management is confident in the power of A-List through the long term as they see the program by itself to be neutral to positive in adjusted EBITDA in 2019 and meaningfully accretive to adjusted EBITDA in 2020.
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